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| Transaction Description: GSP arranged a $7,787,000, 90% loan-to-cost acquisition and rehabilitation loan for a single tenant creative office building in Burbank. The 30,276 square foot building will be home for a post-production company that specializes in closed captioning, color correction, contrast fulfillment, and video editing. A significant portion of the loan proceeds will be used to fund a custom build-out for this special use. |
| Challenge: The Borrower engaged GSP to identify a lender with the best loan-to-cost ratio and the highest probability of close. It was also the Borrower’s preference to have a significant percentage of the loan fixed during the construction period. The construction budget was a substantial percentage of the purchase price, resulting in an uncertain stabilized valuation. The committed-to loan is $257 per square foot. |
| Solution: GSP structured a construction loan into a 1st and 2nd trust deed. By fixing the $4,331,510 first trust deed at 4.50% (2.50% + 10 Year Treasury), fluctuations in interest rates are mitigated during the construction period. GSP was also able to negotiate a 20 year term to avoid a maturity after the fixed period. The $3,455,208 (to 90% of total cost) 2nd trust deed is structured with interest-only payments during construction and a flexible draw schedule. This portion of the loan converts from 3.75% + 30 day LIBOR (4.00% at funding) into a 20-year fixed, 4.65% self-liquidating loan immediately upon Certificate of Occupancy. The 2nd trust deed does not require additional fees at the conversion from the floating to the fixed rate. |
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